Former Bank of Canada governor Stephen Poloz said Canada’s struggling labour market is facing pressure on several fronts, including hiring freezes brought on by trade uncertainty, the attrition of baby boomers entering retirement and the rise of

artificial intelligence. “I think that’s an important thing we’re seeing in the numbers, the freezing plus the attrition,” said Poloz, now special adviser to Osler, Hoskin Harcourt LLP, during a webinar on Thursday. “And I have to add another, which is technology.”

Poloz noted the direct impact on jobs in industries that are trade sensitive, notably autos, steel and aluminum, but also pointed to low business sentiment in the overall economy that has many businesses pausing hiring and rethinking their strategies.

“There is nothing like a period of macro stress to make a country realize, ‘Boy if there is something out there that can save me 10 or 15 per cent on my cost line, I’m going to do it now,’” said Poloz.

Part of that is adopting new technologies like AI, which is showing up in the country’s youth labour market.

“Part of the evidence is in the youth,” said Poloz. “It ( youth unemployment ) has risen far more than the average unemployment rate, so the youth are bearing the brunt of this.”

Other economists have also published findings on the impact of AI on the employment of youth, the cohort of workers aged between 15 and 24. In August, youth unemployment was 14.5 per cent, compared to the overall unemployment rate of 7.1 per cent.

In periods of economic stress, it is often the case that the youth jobless rate is higher compared to the rate in the overall labour market. However, a report by the

Canadian Imperial Bank of Commerce (CIBC) said the recent trends go beyond what would be expected under the current economic backdrop.

The report points to a rise in non-permanent residents over the past few years in this age category as one reason for high youth unemployment but also points to the deployment of AI and other cost-saving technologies in key sectors as another factor.

For example, youth employment has struggled in the business and support services, as well as professional and scientific services in recent years, partly thanks to emerging AI technologies executing research tasks, according to the report. There is also the implementation of other technologies like self-checkouts in the retail sector that is also having an impact.

Poloz said this is just the start of a larger trend. “I think we’re starting to see evidence of the fourth industrial revolution cutting into that front line of new creation of jobs,” said Poloz.

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In the meantime, one of Canada’s largest generations — the baby boomers, are getting ready to retire, another factor Poloz says will impact the labour market, as companies continue to freeze hiring.

“If you can combine that with the fact that they are also seeing a big roll off of workers through retirements, through attrition, has accelerated,” he said. “The bulk of the baby boomers are hitting the 60-65 time frame, so you’re going to get a shrinking workforce (if you have a hiring freeze) in a lot of companies.”